Question

Case Study

Rhy’s Fries – Part 7

May 1, 20X2

It seems strange to Ronald that it was only one year ago that he decided to start this adventure. In early November, he opened up the first Rhy’s Fries location and while sales initially were less than stellar, word quickly spread about the quality of the product and patrons started coming from all over the city to try it out. As the hectic demands of the business grew, Ronald realized he couldn’t handle everything on his own and has had to hire extra staff to manage the workload. One of the employees is an accountant, Sarah, whose primary function is to help him keep track of the day to day operations.

Since this is the end of his first full year of operations he’s going to need to go see Uncle Bob soon to get his year-end statements prepared. Ronald is a little concerned though. The amount of cash in the corporate bank account doesn’t match with the cash balance that is listed in the general ledger. The April 30 bank statement indicated there is $81,483.17 but the ledger indicated there is only $73,547.94 as of April 30. Sarah tells him that there weren’t any month end adjustments made yet and it simply needs to be reconciled. She goes to work to identify the differences between the two balances.

May 2, 20X2

Sarah has identified the following transactions:

• The April 30 bank statement noted bank and credit card processing fees of $1,240.14
• Since April 29^th and 30^th fell on the weekend, Sarah made the deposits for those days in the afternoon of Monday, May 1^st. The amount of the deposit was $987.29 for April 29^th and $1,154.57 for April 30^th.
• The were 3 outstanding cheques; Chq #54 for $4,309.68, Chq#58 for $7,434.50 and Chq#61 for $421.12
• A cheque for $808.07 from a customer was returned NSF. The bank charged a $40 fee for this item (not included as part of the fees noted above)

7a.) Complete a bank reconciliation for April 30, 20X2 using the information provided above.

7b.) Complete any adjusting journal entries required as a result of the bank reconciliation

Answer 1

7(a) April 30,20x 2 Peconciliation Bank On PARTICLARS 81,483.17 Bank sTatement balance Cash per Card procescing fees 1240.14 Add: Cvedut 987.29 In Transit On Apnil, 29 Deposit Add: 1,154.57 Apnl 30th On DeposiT cheques cheque # 54 OUTSTanding deduct: (4309.68) (7434.50) cheque + 58 (421.12) cheque # 61 808.07 cheque retirned from customer charges Add: 40.00 Bank balan ce 73,547.94 Adjusted lash Adjusting 7(b) Journal fr Tnies Debit tredit Card Experses credut a) 1240.14 lash 1240.14 Bank [ 987.29+ 1154.57] b) 2,141.86 cash [987.29+1154.57] 2,141.86 Cash [y309.6&+ 7434.50+421:12) <) 12,165.30 Bank [y309.68+7434.50+421.12 12,165.30 d) Bank 808.07 creditovs 808.07 Bank chavges e) 40.00 cash 40.00